Standing Committee B

[Sir Nicholas Winterton in the Chair]

Finance Bill

(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)

Nicholas Winterton: I bid good afternoon to all members of the Committee. I give notice that, at the Government's request, there will be a meeting of the Programming Sub-Committee at whatever time is appropriate. It may be 7 o'clock, it may be after, it may be before, but I give notice to hon. Members who sit on it, so that they can make the appropriate arrangements.
 I gather that some progress has been made in my absence, but perhaps not enough. I am dependent on the co-operation of the Government Whip, the Opposition Whip and the minority parties. Let us see what we can do this afternoon. I understand that the Financial Secretary was speaking—[Interruption.] It was the Chief Secretary—I do apologise, because there is rather a difference in salary, let alone anything else. The Chief Secretary, whom I have known for many, many years, as he appeared in debates even before he entered this place and was formidable even then, was talking to clause 46 stand part.

Clause 45 - Contract and conveyance: effect of transfer of rights

Question proposed [this day], That the clause stand part of the Bill. 
 Question again proposed.

Paul Boateng: Sir Nicholas, I bid you a good afternoon on behalf of the whole Committee.

Nicholas Winterton: I am sorry, we are discussing clause 45. I am trying to make progress.

Paul Boateng: We can take a hint, Sir Nicholas. I think that we all feel a bout of co-operation coming on. [Interruption.] Maybe we do not. Certainly you can rely on the co-operation of Government Members, as ever, Sir Nicholas.
 Let me give evidence of that at the outset by responding to the hon. Member for Billericay (Mr. Baron). I promised that I would reflect over lunch on his contribution to the morning's deliberations. I did 
 that. I had a take away, he will be glad to hear, such was the extent of my reflection and deliberation and, as a result, I owe him an apology. 
 There has been what is best described as a fundamental transposition. There are two words in the wrong place—I fear two rather vital words. The first sentence of paragraph 9 of the explanatory notes, which currently reads 
 ''A enters into a contract to buy land from B for £100,000'', 
should read ''A enters into a contract to sell land to B for £100,000''. As a result, all should now be clear, where before I fear it was not only less than clear but positively erroneous. I apologise to the Committee and the hon. Gentleman for having inadvertently misled them through that unfortunate, fundamental transposition. 
 On the further point of substance that was raised, I want to make clear the practical effect of clauses 44 and 45 by reference to the figures in the example in paragraph 9, as corrected. C will be charged to stamp duty land tax on a total chargeable consideration of £110,000, which is the aggregate of the £20,000 he pays to B and the £90,000 he pays to A. In other words, C is charged on the same amount as if A had conveyed to B and then B to C. 
 As regards the charge on B, we have recently received representations about situations in which a subsale relief might be legitimately incorporated in stamp duty land tax. We accept many of the concerns that have been expressed. Let me make this crystal clear for the benefit, in particular, of the hon. Member for Torridge and West Devon (Mr. Burnett)—I indicated earlier that I hoped that I would be able to put his mind at rest. It is not the Government's intention that, in the example in paragraph 9, as corrected, B should be chargeable to stamp duty land tax, unless the contract between A and B is substantially performed. We hope that that will address the concerns of off-plan market makers. I have gone further than that. I have asked my officials to ensure that the legislation has that effect, with a view to introducing any necessary clarifying amendments on Report for the avoidance of any doubt at all. 
 If the contract between A and B is substantially performed—for example, by B taking possession or receiving rent—B will be charged to stamp duty land tax on the contractual consideration of £100,000. I am sure that the hon. Member for Torridge and West Devon would accept that not to charge B when there has been substantial performance would be to permit the continuance of a stamp duty avoidance scheme. I do not believe that that is justified; nor, I suspect, does anyone on the Committee. I described the avoidance scheme, which is known as resting on contract, this morning. 
 I hope that the undertaking that I have given on relief for B when a contract is not substantially performed will go a long way towards allaying the fears that exist in the industry, but we are anxious to explore other problem areas in the consultation process. As I indicated, if matters emerge in the course of that process, we will take steps to revisit them.

John Baron: I thank the Chief Secretary for spending such a productive lunch considering the matter. I just want to be absolutely clear about it. The matter is somewhat confusing, and I appreciate his efforts to clarify it. Will he confirm that there is no way whatever that the £90,000 could be taxed twice? As I understand it, we have effectively taken A and B out of the equation, because the example was badly phrased. Will he confirm that with regard to the example given? The example illustrates the fact that the area is terribly complex, and we should be as precise as we can in relation to wording because it can lead to great misunderstandings and cause some consternation in the world outside. I am sure that that point will be taken on board.

Paul Boateng: B is out of the equation, so there can be no question of double taxation, if there is no substantial performance. I return to the point that I made this morning. The test is always whether there is substantial performance. If there is, the possibility arises; if there is not, no possibility exists of payment twice on the £90,000.

Mark Prisk: I am delighted that the Chief Secretary clearly had a conducive luncheon, which led him to this step forward. May I remind him—this relates to the point raised by my hon. Friend—of the question that I raised twice? I hope that he is about to answer it, but I do not see any sign of that. I asked whether, when a housebuilder buys land, parcels it up, develops it and sells the house on, they would be subject to stamp duty land tax on the land. I did not get an answer. The question relates to the current point. I hope that I will get an answer now.

Paul Boateng: I am not sure that I will be able to assist the hon. Gentleman on that point without some considerable elaboration that we will come to when we deal with a clause that we have yet to consider.
 Let me return to the point raised by the hon. Member for Billericay in relation to the question of substantial performance. Where there is no substantial performance, there is no charge. The example that the hon. Member for Hertford and Stortford (Mr. Prisk) gave is that one could envisage circumstances in which there might be substantial performance, but I do not want to go down that route at this stage. I have no doubt that we will revisit it, and I hope that when we do he will be satisfied with what I say to him.

John Baron: I apologise to the Committee for pressing the point, but clarity is required. Half way through the example given in the explanatory notes is the following:
 ''B will pay stamp duty land tax under clause 44 on the chargeable consideration payable under the first contract, £100,000.'' 
Is that a typing error? Should it read ''the first £10,000''? That is what I mean when I say that we are double charging on £90,000. I would appreciate if the Chief Secretary would clarify that point. It is a confusing sentence, and I may be reading it the wrong way.

Paul Boateng: It is confusing only if the figures are wrong, and I have no reason at this stage to believe that they are. Caution precludes me from saying that they are not, but I have absolutely no reason to believe that the figures quoted are wrong, and that one should read ''10'' for ''100''. The important point to recall—I keep going on about it, but it is at the heart of what we are talking about—is that the charge for B will be £100,000 if there is a substantial performance, not £10,000.

John Baron: There is a big difference between £100,000 and £10,000, and if the figure stands at £100,000, I put it to the Chief Secretary that there is a double tax charge on £90,000. I would appreciate it if the Chief Secretary would clarify the point. Is that figure of £100,000 meant to read £10,000, which would clear the matter up, or is it meant to be £100,000? In that case, we need further clarification from the Chief Secretary. Even if we change A and B, as the wording stands, there is still the double charge on the £90,000.

Paul Boateng: I do not want to labour the point, but I can give the hon. Gentleman another example, or I can revisit the worked example that he raises in questions in correspondence. Were I to take the former course, I fear it would delay the Committee more than Sir Nicholas would wish, so perhaps I should take the latter course and write to him about the worked example.

John Baron: I apologise to the Committee for testing its patience, but could I ask the Chief Secretary to clarify the example in the explanatory notes, if possible during this sitting, or by the time of the next sitting, instead of writing to me in correspondence with another example, as that would be more useful to all concerned? Is the figure £100,000 or £10,000? If it is £10,000, it is a single tax charge; if it is £100,000, it is a double tax charge. The example should be worked on rather than something new produced.

Paul Boateng: I do not intend to give the hon. Gentleman another example, particularly in the light of what he has just said. I do intend to work through the example given in the explanatory notes so that he fully understands it. If he then has a problem with that, we can return to it on Report rather then deal with it now. That is probably the best way of making progress.

Nicholas Winterton: Order. I am sure that the Chief Secretary will accept that any such letter that goes to the hon. Member for Billericay should go to the Chairman and every member of the Committee. I understand the Chief Secretary's position.

Paul Boateng: I shall certainly ensure that every Committee member, including the hon. Gentleman and you, Sir Nicholas, receives a copy of the letter, which will make things abundantly clear to all who have been following the exchange closely.

John Baron: If I may test your patience, Sir Nicholas, I would like to ask that that letter be produced in time for our discussions on Report, so that the Committee can examine the issues again.

Paul Boateng: Whenever, in the course of our deliberations, I promise to enter into a correspondence—I hope that it will not be often—you can be sure, Sir Nicholas, that it will be completed before our discussions on Report. I know that you would not have it any other way.

John Burnett: May I welcome you, Sir Nicholas, to the Chair?
 I am heartened by what I have heard from the Chief Secretary, and some credit must go to the revenue law committee of the Law Society, which drew my attention and that of other Committee members to the confusion and lack of precision in the example given in the explanatory notes to clause 45. I have taken comfort from what the Chief Secretary has said, because from what I can gather the Government will table clauses on Report that will preserve subsale relief in certain instances. What comes out of the Government new clauses will obviously require considerable scrutiny. I hope that outside professional bodies and individuals will be consulted on the new clauses as swiftly as possible. This is an important matter and we have had an important debate. The fact that the Government have said that they are prepared to reconsider the matter and are not wedded to abolishing subsale relief is welcome.

Mark Prisk: I also welcome your chairmanship, Sir Nicholas, which I know will be firm but fair.
 At the beginning of this debate, I said that those on the Conservative Benches were deeply concerned about the way in which the abolition of subsale relief was proposed in the clause. Many of those reservations remain, although I agree with the hon. Member for Torridge and West Devon that we have seen, if not a rapid change in the Chief Secretary's position, certainly welcome commitments to bring forward significant changes to the nature and application of the clause. We still have a fundamental reservation, however, about why it was right last year to reinstate the relief and right this year to abolish it. 
 My hon. Friend the Member for Billericay highlighted a concern of many outside professionals and he is to be commended for his persistence in drawing out that information—that is why we are here. I do not want this to become too much of a back-slapping session, but I also commend the Chief Secretary for his willingness to respond to the matter in writing. I suspect that I am not the only one struggling with B, A and C and the figures of £90,000, £10,000 and £100,000, so we would all welcome having that explained in writing. Information in writing will be of particular use to those outside for whom this could be of concern.

John Burnett: Will the hon. Gentleman, like me, be interested if the letter contains elaborate examples of part performance? It is important for the general public and professional advisers to know exactly what the Revenue means by part performance. Does it mean only payment of rent or receipt of profits, or will the Revenue consider other matters to be part performance, such as taking possession?

Mark Prisk: I am not sure that I would necessarily use the word ''elaborate'', but I hope that the letter will provide a full range of options. Although my request was not responded to on three occasions, I hope that we will finally receive an answer about the housebuilder, the first-time buyer and the parcels of land. Does the Minister want to respond to my question? He does not. What a shame. I hope that he will do so in his letter. Such matters are of crucial importance to first-time buyers, if they are to face a second charge—a stealth tax—under the provision. I began the debate by saying that we want to hear what the Chief Secretary has to say about the matter and that we have reservations about the way in which the clause will operate.

Michael Jack: Does my hon. Friend, like me, believe that the whole episode is an interesting reflection on the quality and output of the 280 hours of consultation that prefaced our discussions?

Mark Prisk: As always, I am grateful to my right hon. Friend who is prescient, if notthing else. [Interruption.] Of course, he is many other things. He has much more experience that I do in such matters and understands the issue. My right hon. Friend will appreciate the fact that many organisations, including the Chartered Institute of Taxation, have said that the measures and the absence of subsale relief are unsatisfactory and require a major rethink. My right hon. Friend is right. The compensation process has been inadequate. It has failed to provide the information that the Government could have provided to make the Bill full, clear and open for all to see. That is not the case now.

George Osborne: Does my hon. Friend agree that one of the problems is that we are still being asked to pass a clause that abolishes the relief? Although the Government say that there will be many exceptions and that they will come forward with them, the Committee does not have a clear idea about what the exceptions will be, their extent or the proportion of transactions that they will cover. That is an extremely unsatisfactory position.

Mark Prisk: As my hon. Friend knows, I made a heartfelt plea to the Chief Secretary about the matter. We are in a bizarre situation, and I know that you, Sir Nicholas, will be concerned about it. The Chief Secretary referred to a consultation process that is taking place as we debate the matter. It may change the nature of the clause, yet we cannot scrutinise it. The right hon. Gentleman said consultation was a good thing. Of course, it is. However, for it to run in parallel when we, as parliamentarians, are scrutinising the Bill, not knowing what the consultation process will
 deliver, is wholly unsatisfactory. My hon. Friend the Member for Tatton (Mr. Osborne) has made a pertinent point.
 In the spirit of good will, I am tempted not to vote against the clause, but only on one proviso, which is that the Chief Secretary will tell the Committee that he will listen to all propositions put forward by outside bodies and that substantial changes will be made to the clause. If he cannot do so, Conservative Members will still feel the need to vote against the clause. Will he advise us of his intentions?

Paul Boateng: I do not know whether I can make myself more clear than I have already. It has been interesting to watch the exchange between the hon. Member for Tatton and the hon. Member for Hertford and Storford, who leads for the official Opposition in Committee. I sense that one hon. Gentleman was egging on the other, as I sense that the still, small voice of reason was at work in the mind of the hon. Member for Hertford and Stortford, but was overcome by the hon. Member for Tatton. That is sad, and if it is to be the hallmark for the future, we shall spend considerable time until the guillotine falls debating such provisions.
 Let me give an assurance that I hope will satisfy all Opposition Members. We will move clauses on Report to make it clear that relief will be available in wider circumstances than would otherwise be the case under the clause as it is drafted. I hope that that important point is clear and understood and that it provides a reason for not dividing the Committee at this stage. 
 As I have said, it is not the intention to charge a contract that is not substantially performed. In the example in paragraph 9 in the explanatory note, which we have discussed in some detail, there would be no charge on B. I hope that that sets at rest the mind of the hon. Member for Billericay. That aside, the effect of the clause is to charge contracts that are substantially performed, which may excite the hon. Member for Tatton, who seems hell bent on stirring it in the Committee. That is the whole point; that is why we are gathered here.

Michael Jack: On a point of order, Sir Nicholas, I would be grateful for your guidance. I recall that in the past when members on the Government Benches in the Committee considering the Finance Bill had doubts about a clause, that clause could, if they so wished, not be moved while awaiting further work to be done on it. Does that facility still accord itself to the Chief Secretary today, if he so wished?

Nicholas Winterton: This clause has been moved from the Chair. Therefore, as with all clauses on stand part, it must be disposed of. I seek only to give guidance to the Committee; the Committee will do what it wishes. The Chief Secretary appears to have given certain assurances to the Opposition. If that is not good enough, so be it; members can continue to pursue the point. Nevertheless, the clause must be disposed of.

Paul Boateng: I am grateful, Sir Nicholas. Opposition Members will have heard your wise words.

John Baron: Will the Chief Secretary give way?

Paul Boateng: Or not, as the case may be.

John Baron: The Chief Secretary made the point—the first time I have heard him make it—that there will be no charge on B. Can I be clear that the sentence on which I have been dwelling, about paying
''stamp duty land tax under clause 44 on the chargeable consideration payable under the first contract, £100,000'' 
does not stand and that it will be taken out of the equation?

Paul Boateng: Let me suggest to the hon. Member for Billericay that it would be unwise to revisit a point that we have laboured extensively. I shall write to him about the worked example, in order to clarify it.
 I reiterate that there is no charge if there is no substantial performance. That point has sunk in in some quarters, although I saw the hon. Member for Tatton busily stirring it with the hon. Member for Billericay. The hon. Gentleman made a good point to which I have responded. I will write to him. He must resist the blandishments on his left hand side and in front of him. If he does not, he will be led into error. That is my experience of the hon. Member for Tatton. I feel that it is necessary to give some counsel.

John Baron: Will the Chief Secretary give way briefly?

Paul Boateng: I am tempted, but I am not going to. We must, with your agreement, Sir Nicholas, draw this to a close.
 The effect of clause 45 is to charge contracts that are substantially performed. Of course, as we have said all along, that issue and the wider questions about where further targeted reliefs might be granted will be the subject of further consultation. I have given the hon. Gentleman as strong an indication on that as I possibly could. That is our intention. The consultation will take place. We will come back to the Committee if further targeted reliefs are justified. I cannot say fairer than that. What more can I do? I hope that, with that, even the hon. Member for Tatton will be satisfied and Opposition Members will not press the clause to a vote. However, it is a matter for them.

Mark Prisk: On three occasions I have asked for an answer with regard to house builders and on three occasions the Chief Secretary has either chosen not to, or failed to, provide such an answer.
 We have a number of other concerns about the clause. The Chief Secretary has tried to answer some of them, but I have listened to him with care and unless he has further information that he wishes to reveal, Opposition Members are not convinced about this set of changes. Therefore, we shall take the clause to the vote. 
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 14, Noes 7.

Question accordingly agreed to. 
 Clause 45 ordered to stand part of the Bill. 
 Clause 46 ordered to stand part of the Bill.

Clause 47 - Exchanges

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause also refers in part to paragraphs 5 and 6 of schedule 4 and we wish to ensure that there is a full debate on it. Indeed, I hope that the Chief Secretary will be able to respond to a number of questions.
 The clause would remove the relief provided by stamp duty on exchanges. At present, the stamp duty is paid by the purchaser of the more expensive property. By abolishing the relief, both parties would pay stamp duty land tax, as the clause interprets such an exchange as not one transaction but two. 
 Members of the House and those outside have a number of concerns. The first one is perhaps a little more technical. Given the wide definition of consideration, which is set out in more detail in paragraph 5 of schedule 4, what is the purpose of clause 47 (1)? I shall not labour the point by reading that subsection in detail, but many lawyers have looked at it and asked whether it is superfluous. 
 Subsection (3) refers to paragraphs 5 and 6 of schedule 4. I do not intend to stray into schedule 4 more than that. Yet, paragraph 5 of schedule 4 seems merely to restate subsection (1) almost word for word. Can the Chief Secretary tell the Committee what the precise purpose of paragraph 5 is? What does it add that is not already elsewhere in the Bill but is needed to define the scope of the tax? 
 That is my first concern to which I hope the Chief Secretary will respond, but I have others of a less technical and more practical nature. The clause will create significant distortions—for example, when a landlord and tenant exchange properties or leases. I shall refer to one example and I am grateful to the Law Society of Scotland for raising it with me. The society argues that when a landlord accepts a renunciation of 
 a lease for no cash consideration but as part of a deal to provide the tenant with a new lease at market value rent, it is not clear how the clause and schedule 4, to which it relates, will apply. I shall return to A and B for the sanity of the Chief Secretary. Suppose that tenant A renounces a lease to landlord B and, as part of the transaction, B grants to A a new lease on a new building. Paragraph 5(3)(a) of schedule 4 seems to suggest that if landlord B's interest in the lease that is being renounced has a value, the renunciation will be taxed on that value and the new lease will be taxed on the rent. 
 Schedule 5 governs the taxation of the rent. If the renunciation was seen to be the supply of services, it would create a chargeable consideration for the purposes of paragraph 9 of that schedule and the market value of that chargeable consideration would become taxable, possibly at 4 per cent. Can the Chief Secretary confirm that that is not the Government's intention? The Bill is unclear and his confirmation that that is not their intention would assuage the concern of many people. Does he accept that the rate should not include the value of a lease that is then subject to renunciation? 
 That is one example of the way in which the clause will distort the marketplace. The danger with urban renewal schemes is that the clause could act as a restraint on proactive agencies and developers who decant businesses from older properties so that they can be refurbished because it would prevent them from moving those decanted businesses into newer or refurbished properties. That activity is crucial to urban renewal and if the process is not available, much urban regeneration of our cities will be prevented. After all, the Government recognise the need to provide relief for residential relocation in clause 59, so why are they ignoring company relocations? Can the Chief Secretary explain the logic of that and, if he accepts that an exchange of properties is not a double transaction but a single event, why impose a double charge? 
 The Chief Secretary has been enthusiastic in pronouncing the aims of the new tax. The consultation and his comments during earlier debates emphasised the need for fairness, modernisation and reflecting commercial practice. However, the clause and the way it will affect the marketplace do not reflect commercial practice today and most certainly are not fair, so why impose the double charge? I hope that the Chief Secretary can explain the thinking behind the clause and how he believes it will fulfil the objectives of what he still claims to be modernisation of stamp duty.

Jonathan Djanogly: The concept that there are two transactions in the exchange fascinates me because in other areas of tax, such as capital gains tax on an exchange of shares, there is deemed to be one transaction.
 With something like roll-over relief, one transaction rolls into the next and the gain is held over until the final transaction, but the Bill seems to break with that way of thinking. I would be interested to hear the Chief Secretary's views on why that decision has been taken.

Paul Boateng: Stamp duty land tax is paid on the chargeable consideration for a transaction and that chargeable consideration comprises money or money's worth. Money's worth can include another interest in land being given in exchange for the interest being acquired. Subsection (1) of the clause makes it clear that if interests in land are exchanged in that way, each acquisition of an interest counts as a separate acquisition on which tax may be payable.
 There is nothing new in that situation, which reflects the stamp duty position since 1994. However, since 1994 the Inland Revenue has, by concession, allowed a scheme known as the single sale route to attract only one payment of stamp duty rather than two. Members of the Committee may know how the scheme works. Let us say that two individuals agree to exchange their houses. If the transaction is described in the documentation as an exchange, with each individual agreeing to buy the other's house, two stamp duty liabilities will arise. However, if individual A agrees to buy individual B's house and agrees to satisfy the payment for the house by transferring his house to B, only one stamp duty liability will arise. 
 To return to the principles that run through the legislation, an aim of stamp duty land tax is to ensure that tax arises on the substance rather than the form of transactions. In the example that I have just given, the form is everything. Therefore, to go to the heart of the matter—the transaction—it is necessary to make it clear that under the new dispensation there is no place for the single sale route, which always relied on documentation being drafted in one form rather than another. Subsection (2) makes it clear that the single sale route will no longer be available. 
 Of course, the Government recognise that urban renewal has an important role to play and that recognition has been the linchpin of the Labour party's approach to such issues. Therefore, I have no problem in giving the hon. Member for Hertford and Stortford the assurance that he seeks. I do not want to get party political at 12 minutes past 5 in the afternoon, but no one can say that we have not done our bit in promoting urban regeneration. Undermining it would be the last thing that we would do. 
 The Government recognise that simply abolishing the single sale route might cause hardship, particularly for housebuilders who have used the route as a tax-efficient way of offering part-exchange deals to potential buyers of their properties. As I said in earlier debates, there is no intention to interfere with that. The Government have listened to representations—consultation has worked—and clause 58 therefore contains a targeted relief for part exchanges of that type. 
 As the hon. Gentleman said, the method of calculating the chargeable consideration for exchanges is dealt with in paragraphs 5 and 6 of schedule 4, which we shall consider later in conjunction with clause 50. Schedule 4 also introduces additional reliefs for the exchange of minor interests and the partitioning of property.
 The Government believe that the clause, when considered in conjunction with the reliefs that are being introduced, fulfils the principle of taxing the substance of transactions rather than the form. The part-exchange relief will guard against a particular hardship for housebuilders that the blocking of the single sale route might otherwise cause. I hope that the Committee will not have difficulty with the clause, particularly when one considers my response to the specifics raised by the hon. Gentleman.

Jonathan Djanogly: Is not the point, therefore, that we are talking not about a question of avoidance, but a new tax?

Paul Boateng: It is not a new tax. We are closing loopholes and ensuring that opportunities for avoidance are removed.

John Burnett: It would help the Committee if the Chief Secretary explained the current law. If two properties each worth exactly £1 million were exchanged, what would be the stamp duty repercussions under current law?

Paul Boateng: May I come to that in conjunction with the detailed responses? I hope that it will then be made clear.

Michael Jack: Will the Chief Secretary give way on that point?

Paul Boateng: No, I am afraid not. The right hon. Gentleman will have the opportunity to intervene on my response to the intervention of the hon. Member for Torridge and West Devon.
 I have been asked what the clause is for. Given the wide definition of consideration in schedule 4, is it really necessary? That is the substance of the charge. The clause and exchange paragraphs in schedule 4 contain special rewards for chargeable consideration when land is being exchanged. The general rule for chargeable consideration is that it is the market value of the consideration given for the transaction, which would imply that one values the land one is giving to determine tax on the land one is receiving. That would be unnecessarily complex, so instead the parties are charged on the market value of the interest that they are acquiring, which is the same as the current position under stamp duty. The clause and schedule simplify the rules in relation to exchanges rather than adding to them. There is nothing otiose or superfluous about the clause. It simplifies matters, and I would have thought it would be welcome.

Mark Prisk: The Chief Secretary has perhaps misheard me. My concern about the superfluous nature of clause 47(1)—not subsection (3) that he is now referring to—is that subsection (1) is almost verbatim a copy of schedule 4(5). It was a narrower point. I am grateful for that wonderful tiptoe through the clause as a whole, but I was saying that subsection (1) is almost identical to schedule 4(5). I think that the Chief Secretary was trying to answer a different question.

Paul Boateng: I do not think so because my point bears repeating in the context of the schedule. It is necessary for the avoidance of doubt that it should be included in that way. I do not think that the hon. Gentleman would want us to remove it—if we did so, it might well lead to one of the famous lacunae of the hon. Member for Torridge and West Devon. That would never do. The provision is included for the avoidance of doubt, and I hope that it is accepted as such.
 At the instigation of the Law Society of Scotland, the hon. Member for Hertford and Stortford pointed out how the change will affect surrenders and re-grants that arise from operation of law. We touched on that earlier. Surrender and re-grant of a lease can occur by operation of law when the duration of that lease or its area is amended. It is assumed that the existing lease is replaced with a new lease on the same terms save for the amended duration or area. That could lead to a fresh liability to pay stamp duty land tax on the new lease. There is nothing new about that because it was also a potential problem in relation to stamp duty. In the modernised regime, we want to improve the situation by including paragraph 14 of schedule 4, which we will discuss later. The tax will still be payable based on the net present value of the rents due under the re-granted lease. In fact, a surrender and re-grant by operation of law can be fairly easily avoided and it is not something that should normally arise; for example, an extension of a let area could be documented by way of a supplementary lease of the additional area. We do not therefore see any pressing need for a further change to stamp duty as a result of modernisation. 
 Further representations have been received from a variety of sources that want more reform that would go beyond that that is available in relation to the stamp duty regime. We will happily consider any representations during the consultation on lease duty. I hope that on that basis the hon. Gentleman will, for the time being, feel that the point made by the Law Society of Scotland has been dealt with. Concern has also been expressed about how the treatment of exchanges will adversely affect the building trade.

Michael Jack: In his remarks to justify clause 47 to date, the Chief Secretary has prayed in aid the property exchanges that occur between a housebuilder and somebody who wants to buy a new house. Can he explain how the process that he describes differs from clause 58, which appears to deal with the same thing differently? Why do we have two different ways of dealing with exchanges?

Paul Boateng: A study of the Bill will reveal that the context of clause 58, to which we shall come in due course and to which amendments have been tabled, and that of clause 47 are different. On the change in the treatment of exchanges adversely affecting the building trade, a new relief will apply when a developer acquires a property in part exchange for a new property. The relief will re-enact the current single sale route in a modified form for that situation—that is contained in clause 58. A further relief will apply when
 certain minor interests in land are exchanged for each other. If the two reliefs are taken together, their effect is to represent a better deal for builders than that which was proposed in the original consultation document. The original proposal caused a certain amount of concern in some quarters. Those concerns were made known to us, we listened to them and as a result we have the current proposals.
 I shall deal, albeit briefly, with one other matter related to exchanges: exchanges linked to transactions. That issue was raised by the hon. Member for Huntingdon (Mr. Djanogly) and touched on by the hon. Member for Hertford and Stortford. If a taxpayer acquires two properties in exchange for one, the two acquisitions will be linked to each other and the rate of tax will be based on the aggregate value. However, the two sides of the exchange will not be linked to each other because the party who is the purchaser on the one side will be the vendor on the other. Therefore, if two £300,000 properties were exchanged the rate would be 3 per cent., not 4 per cent., because the consideration of £300,000 on each side would be aggregated due to the link: the purchaser on one side and the vendor on the other. I hope that that explanation of how the links work addresses the hon. Gentleman's concern.

Jonathan Djanogly: For the sake of clarity, is the Minister saying that the effect would be to disaggregate those, so that rather than getting the stamp duty in one part, which could be a lower rate, the Government would get it in two parts, which could be a greater amount?

Paul Boateng: The point is to be fair and not aggregate the two, otherwise it would be £600,000. This is modernisation, but it is also fair. The charge falls at 3 per cent., not 4 per cent.

John Burnett: Will the Chief Secretary confirm that there will be one charge to tax on an exchange of two properties worth £300,000 each, as in his example, and that it will be for the parties to work out and calculate who pays what proportion of the tax?

Paul Boateng: Where the party who is the purchaser of one property is the vendor on the other, in an exchange in which two properties are exchanged for one and the two acquisitions are linked to each other, the rate will be based on the aggregate value. In the example I have given the Committee, where the exchanges will not be linked to each other because the party who is the purchaser on one side is a vendor on the other, the value is £300,000, attracting a rate of 3 per cent. One charge on an exchange of two properties that are each worth £300,000 will create a situation in which two charges go to tax, but only at the 3 per cent. rate, not 4 per cent.

John Burnett: The Minister will know that such transactions are usually done on one deed that says, ''In consideration of transfer A, we transfer B'', and vice versa. In such circumstances, there is one deed. Let us say that there is exact equality of consideration and the value of each property is £300,000. The Committee
 would like to know what would be the charge to stamp duty and how it would be apportioned between the parties.

Paul Boateng: That goes back to the point made earlier on an exchange of two properties worth £1 million. At present, stamp duty can be avoided and paid on only £1 million if documents are drafted in a particular way. That wheeze will no longer be available. That is the point. We are considering the substance, not the form. That applies whether it is £1 million or £300,000.
 We want to be fair as well as to modernise. That is why we want to bring forward the release in the way we do. The right hon. Member for Fylde (Mr. Jack) effectively found in clause 58 a relief that applies to clause 47. That is the connection between the two. Is there a charge? Yes there is, to prevent the type of avoidance wheeze that I outlined. At the same time, there is a relief when one is due. I hope that with those assurances the Committee will find it in its heart to agree to the clause without further debate.

Mark Prisk: I am well aware that the Chief Secretary has dealt with this matter at some length, so I do not intend to detain the Committee any further than is necessary. I feel, however, that it is important to respond. I do not accept his argument that by making two transactions chargeable in both cases, which is not the case at this stage, that means everyone suddenly has a better deal. He referred to clause 58, which we will come to in due course, although he will know, as members of the Committee who have studied that clause know, that it contains a limited relief that in no way helps the cover that he has suggested. It is not a wide application of relief; it is very narrow.

Paul Boateng: This is the point that the right hon. Member for Fylde made. He asked why clauses 47 and 58 treat the same thing in different ways. The answer is that clause 58 is effectively a relief applying to clause 47. Surely the hon. Gentleman welcomes the relief. We recognise that a relief is due; we provide one. Certainly the clause is drafted in such a way as to prevent avoidance, but that is what the Committee is about—preventing avoidance and the sort of wheeze outlined by the hon. Member for Torridge and West Devon.

Mark Prisk: The Chief Secretary describes clause 58 in a way that most professionals who read it would not accept. I do not intend to stray too far into clause 58, because, as he will know, that provision is available only for the small number of people who wish to trade up and not down. However, I shall not press that point further.
 I hope that in the parallel consultation that is taking place while we are trying to consider the Bill—I again register my concern and protest about that process—the Government will listen to the representations and amend the clause accordingly.

John Burnett: Does the hon. Gentleman agree that one can hardly characterise the arrangements that I outlined of one document and two properties being exchanged as a wheeze? It has been a matter of fact and something that has happened for many years, probably for the duration of stamp duty, and is considered by most professionals to be a legitimate exemption.

Mark Prisk: We come to the nub of the issue about the way in which reliefs are removed wholesale—subsales are a good example, if you will pardon the pun, Sir Nicholas, and exchanges—and then narrow and prescriptive targeted reliefs are provided later.
 This approach will create many more loopholes and will incense many law-abiding taxpayers, because they will see it as inherently unfair. That is why, as we have said on a number of clauses, we believe that the tenor, the aspects and the way in which the clause and others are drafted will not help the Revenue to draw in and tackle genuine attempts to get rid of taxes. I accept the point that the hon. Member for Torridge and West Devon made. 
 Question put and agreed to. 
 Clause 47 ordered to stand part of the Bill.

Clause 48 - Chargeable interests

Question proposed, That the clause stand part of the Bill.

Mark Prisk: We come to the clauses that deal with chargeable interests, chargeable transactions and chargeable considerations. The clause specifically defines chargeable interests, where the acquisition of such interests constitutes a land transaction. Therefore, it relates back to clause 43. I am sure that in his reply the Chief Secretary will make similar references.
 Subsection (1) defines the clause as a whole. It says: 
''In this Part 'chargeable interest' means— 
 (a) an estate, interest, right or power in or over land in the United Kingdom, or 
 (b) the benefit of an obligation, restriction or condition affecting the value of any such estate, interest, right or power''. 
Many experts who have studied this provision from an accountancy, legal or taxation point of view feel that the scope is incredibly wide. The problem is then compounded by subsections (5) and (6), in which the Government give themselves the almost endless ability to amend the power as and when they see fit. That creates the problem of a lingering uncertainty as to exactly where the law-abiding taxpayer stands. A number of people have questioned the definition of the phrase 
''power in or over land''. 
 Is it restricted to the appointment of trustees of a settlement? Or does it extend wider? Will the Chief Secretary explain what is not included in the phrase? 
 There is a further example. Will the Chief Secretary confirm that subsection (1) does not apply to the interest of a discretionary beneficiary, other than as 
 already identified in schedule 16? I ask that because the definition of chargeable interest in subsection (1) appears to include rights of way, that is to say easements, and covenants—such as we discussed earlier—not to build on land. It appears that, in trying to strengthen the anti-avoidance powers, the Government have strayed far beyond what any reasonable person would regard as fair. That is not simply my view; it is the view of taxation experts. Much of the assurance that the Chief Secretary gave when we debated clause 43 is contradicted. I ask him to clear up the confusion and the contradiction between his assurance and the Bill. 
 On subsection (2), will the Chief Secretary explain the Government's understanding of a licence? I may have missed it in my intimate reading of the Bill, but in my interpretation of clauses 116 onwards, I could not find a definition of a licence. I would be grateful if the Chief Secretary would confirm his understanding of its meaning in the context. 
 The clause, like so many others, in many ways typifies the unsatisfactory approach to the tax. The Government want to grant themselves the widest possible powers and the ability to alter those at any point. The result is to leave maximum uncertainty. The first danger is that that creates the risk of people paying tax simply because the Treasury has not correctly identified them as being outside its purpose. Secondly, there is the danger that that will lead to more tax avoidance because of the loopholes, confusion and lack of clarity.

Paul Boateng: There is no confusion, lack of clarity or contradiction. The clause defines a chargeable interest. The acquisition of a chargeable interest constitutes a land transaction. The SDLT applies to land transactions. The definition in subsection (1) is broad, and subsection (2) then lists exclusions from that definition, which are defined as exempt interests.
 A chargeable interest includes freeholds and leaseholds, and their equivalents in Scotland and Northern Ireland, rights over another's land, and powers of appointment exercisable in the context of trusts of land. The benefits of restrictions and obligations that bind another's land are included only in so far as they affect the value of that land. 
 Exempt interests are: under paragraph (a), security interests, such as mortgages; under paragraph (b), licences to use or occupy land; and, under paragraph (c), in England, Wales or Northern Ireland, tenancies at will and advowsons, franchises and manors. As would be expected, the Treasury has the right by regulation to expand the list of exempt interests. 
 That addresses the points that the hon. Gentleman makes. Let me just deal with the issue of powers, which seems to exercise him. In practice, the only powers that are likely to be caught by the SDLT regime are powers of appointment exercised by trustees of land. If such powers were not caught, there will be possibilities for avoidance of SDLT—a fact that is patently obvious. If it were possible for trustees to exercise a power of appointment, that would drive a coach and horses through our proposals because it would open up a new area of avoidance mechanisms.

Jonathan Djanogly: I should be grateful if the Minister would explain the current position. If stamp duty is not payable on the sale of equitable interest in land, is it the case that the proposal will be a new tax in that respect?

Paul Boateng: The proposal is not a new tax. I have been asked how SDLT will apply to trusts. The Chartered Institute of Taxation asked for confirmation that clause 48(1) will not cover the interests of a discretionary beneficiary, other than is provided for under paragraph 2 of schedule 16.
 I shall give a detailed answer to avoid any doubt, and I shall choose my words particularly carefully. Paragraph 2 of schedule 16 does not cover discretionary interest, but equitable interest. A person who has a discretionary interest in a trust does not have an equitable or any other interest in assets under English law. If someone is named as a beneficiary of a trust when the trustees have discretion over the disposition of assets, that person does not acquire an interest in land so there is no land transaction. The type of interest covered under the paragraph is a non-discretionary interest of which the most obvious example is a life interest in possession trust or an accumulation trust. That will mean, for example, that the purchase of a reversionary interest and an interest in possession trust when the asset is land is a land transaction. That seems obvious and necessary to stop avoidance mechanisms.

John Burnett: The Chief Secretary is talking about interest in possession trusts or accumulation in maintenance trusts. When there is an appointment or, for example, a surrender of a life interest for no consideration, I am sure he will agree that, under the present regime as under the past stamp duty regime, no stamp duty will be payable.

Paul Boateng: None of what I have described affects discretionary interest. Paragraph 7 of schedule 16 applies to the exercise of a discretion, and the explanatory notes set out how that paragraph works. In essence, if a person pays trustees to exercise their discretion to give him land, the acquisition of the interest in land is a land transaction under the general rules. That is obviously necessary, otherwise one would again have an avoidance mechanism. The payment to the trustee is consideration for that land transaction. It closes down what would otherwise be a straightforward way in which to avoid the tax. The purchaser could argue that the payment was for something other than for acquiring land.
 Paragraph 7 of the schedule applies in the same way to a payment to exercise a power of appointment. The mischief that it is designed to avoid is the same mischief: the use of something artificial, the power of appointment or the payment of a consideration to make a trustee exercise his discretion in a particular way. However, the provision does not cover all the possibilities in respect of trusts. It is possible to avoid a charge to SDLT using trusts and powers in another way, so it is necessary to be vigilant in that regard to stop abuse.
 A point has been made in some detail about why there is no definition of licence. If my memory serves me well, there is no definition of licence in statute, because licence is an ancient creature of common law. The last people who I would have expected to suggest that we throw over 1,000 and more years of tradition in the common law in order to give something a statutory definition that has never previously been so treated are those who are fighting so tenaciously to hold on to legislation that has not been reformed for 200 years. 
 I am surprised that we are under pressure to define licence. For a start, it would spoil the fun of countless examiners who have, over the years, presented hapless students with lists of circumstances and asked them whether they denote a licence or a lease. I note that several Opposition Members have done that, either as examiners or students. 
 In my experience, the best way to answer such a question is to suggest what the characteristics are of a lease and what those are of a licence, and hope to glean some marks for having got some of them right. We will not reverse established practice and statutorily define what we know is a matter of common law. A licence is a personal right; a lease is an interest in land. In general, an arrangement will be a lease if it grants exclusive possession of land, especially if it were for a substantial time and not terminable on notice. I have given a broad explanation of some characteristics of the distinction between a licence and a lease, and I do not intend to go any further than that.

John Burnett: Can the Chief Secretary help the Committee on stamp duty, land tax and trusts? What would happen if there were a gratuitous surrender of a life interest in land, so that the land reverted to the remainder man with no consideration passing. I am sure that it is fairly simple for the Chief Secretary to say that, in those circumstances, there should be no stamp duty or land tax.

Paul Boateng: No, I shall not say that. It would be most unwise. The hon. Gentleman must look at the substance, not the form. If I say otherwise, I shall open up the potential for an ingenious and highly paid adviser to use my words to set up a new wheeze for avoidance. We are considering the substance, not the form. That is the approach that the Revenue will take and one that I suspect the courts will take. I urge all those who seek to open up new areas of avoidance to bear that in mind. I hope that, with that assurance—if, indeed, it is an assurance; it is certainly an assurance to the honest, law-abiding taxpayer—clause 48 will be given a fair wind.
 Question put and agreed to. 
 Clause 48 ordered to stand part of the Bill.

Clause 49 - Chargeable transactions

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause defines chargeable transactions through schedule 3 by providing for exemption. I trust therefore that it is in order for me to refer to that schedule, Sir Nicholas.
The Chairman indicated assent.

Mark Prisk: Thank you for that guidance, Sir Nicholas. Under paragraph 2 of schedule 3, certain leases are exempted specifically for registered social landlords. I have studied the explanatory notes in detail to elicit the background to the provision. They state that the purpose of the proposal is
''to encourage social landlords to enter into such arrangements.'' 
 Clearly, it is important that, when lettings to the homeless or other vulnerable groups are affected, barriers should be removed. 
 Can the Chief Secretary tell the Committee what representations he has received from registered social landlords about the applicability and enforceability of the clause? He admitted earlier that, over and above the money clawed in from anti-avoidance measures, there will be an additional gain for the Revenue of £190 million from the new land tax. Can the right hon. Gentleman say what estimate the Treasury has made of the money to be saved by granting the exemption for social landlords? 
 Paragraph 3 of schedule 3 will exempt transactions in connection with divorce. I wish to make two points, one of which is minor. I trust that it was not intentional to omit the word ''land'' from line 35. Clearly, only land transactions would or should be affected by the schedule, yet the word has been omitted. I am sure that the Chief Secretary will want to clear up that mistake. Has he considered altering or extending the provision so that it will help a brother or sister who live together, a matter that was referred to earlier? What representations has the right hon. Gentleman received about such matters? 
 I turn now to paragraph 4 of schedule 3, which is wonderfully entitled ''Variation of testamentary dispositions etc''. In plain English, that relates to wills and intestate estates that are varied. As such, I assume that the word ''land'' has been left out of paragraph (4)(1). Clearly, a transaction should relate only to a land transaction. I hope that the Chief Secretary can confirm that omission. Can he also confirm that the terms are identical to the existing arrangements in their meaning and scope? If they are not identical, how do they differ and whom will the provisions affect?

Nicholas Winterton: Before the Minister replies, I note that the hon. Member for Hertford and Stortford seems to have directed all his remarks to schedule 3. I am not unhappy that he should have done that but, if he considers that there will be a lengthy debate on the schedule, I must disappoint him.

Mark Prisk: No, Sir Nicholas. Having looked at clause 49 and understood that it effects its purpose through the schedule 3, it is not my intention to revisit schedule 3 in its entirety.

Nicholas Winterton: I am grateful to the hon. Gentleman. I am sure that the Chief Secretary wishes to reply.

Paul Boateng: I am grateful for the reassurance that there will be no further debate on schedule 3.
 The clause defines chargeable land transactions as those that are not exempt. Chargeable transactions will usually give rise to a charge, unless, for example, they are for consideration below the charging threshold, which is £60,000 for residential land and £150,000 for non-residential or mixed-use land. Schedule 3 lists certain exempt transactions, the first of which includes gifts, transfer of policy following the death of the owner, transfers of property to beneficiaries under a trust in accordance with the terms of the trust, and most acquisitions by operation of law. That reflects the current position. I give the hon. Gentleman an assurance about that. 
 Secondly, certain leases are granted by registered social landlords under agreements to house the homeless. That is a new exemption that reflects Government policy to encourage such agreements. The hon. Gentleman asked how many representations the Government have received from registered social landlords in respect of that provision. I am not able to give him the answer for the whole Government; I personally have received one, which welcomes the provision. That is probably typical of the general response of the social landlord sector to the provision. 
 Thirdly, the Bill deals with transactions made in connection with the ending of a marriage. That reflects the current position. The Treasury has no power to add further exempt transactions by regulation. I hope that that reassures those who are always concerned about the potential of the Treasury to assume further powers in relation to such matters. 
 I was asked whether paragraphs 3 and 4 of the schedule should apply only to land transactions. The answer is yes, but the provision is not an error, because paragraph 1 contains a reference to land. Only land transactions are brought into charge into the first place, so the reference to transactions refers to paragraph 1. There is nothing unusual or erroneous in that. The additional cost of exempting registered social landlords—something I believe to be widely welcomed by the sector—will be marginal. Our estimate is that the additional cost will be less than £1 million per annum.

Mark Prisk: I am grateful to the Chief Secretary for his clarification of some of the language used. He has confirmed that the benefit to social landlords is under £1 million or thereabouts, and I am grateful for that clarification.
 Question put and agreed to. 
 Clause 49 ordered to stand part of the Bill. 
 Schedule 3 agreed to.

Clause 50 - Chargeable consideration

Question proposed, That the clause stand part of the Bill.

Mark Prisk: We come to a very important clause. I shall restrict my remarks to clause 50. Others may also wish to do that, under your guidance Sir Nicholas. Although some aspects dealt with specifically under schedule 4 relate to clause 50, I would prefer to restrict my remarks to the clause.
 The clause deals with what is termed a chargeable consideration. It does so by referring to schedule 4. However, subsections (2) and (3) provide the Government with the ability to amend or appeal any part of that crucial definition. It gives the Government the power to do that as and when they choose. Although we fully recognise that the Government need the ability to amend legislation to reflect changing circumstances and practice, I must register the concern felt on our Benches and by outside practitioners about the inadequacy of the drafting of the clause, and the huge uncertainty it creates for those who will seek to comply with it. 
 Is the Government's aim fairness, and if so how can the ability to change the way in which a tax affects people be justified? If the Chief Secretary's purpose is to reduce tax avoidance, why seek to enact a new tax that is so open to misinterpretation? We shall debate later what a chargeable consideration actually is, but I am concerned that there is a serious question of clarity for the taxpayer in relation to clause 50. People need to know where they stand in their tax affairs to be able to plan their private lives and their businesses. Many small businesses find it difficult to cope with the fact that the tax regulations chop and change. That is the root of our concern and I hope that the Chief Secretary will reflect on that in his response.

Michael Jack: I apologise for being ever so slightly slow from the starting blocks, but I want to reinforce and underscore my support for the argument that my hon. Friend has put forward. Interestingly, in the notes on clauses we are told that the negative resolution procedure will be used to make the changes to which he referred. That means that the chances of such measures being properly debated in the House are to say the least, from the Opposition's standpoint, slim. A more generous interpretation is that that will be totally in the gift of the Government of the day.
 We do not know by what mechanism the changes will be made. The clause states: 
 ''The Treasury may by regulations amend or repeal the provisions of this Part relating to chargeable consideration and make such other provision as appears to them appropriate''. 
That is a three-way bet. The Government can knock the provision on the head, introduce something new or do something completely different. We have no indication as to the scope, scale or contingency that the provision seeks to address, yet we are being asked to 
 give carte blanche to Treasury Ministers to make changes in the law contingent on events of which we have no knowledge. That is bad legislation. 
 In another dimension, I have been faced with drafting legislation to reflect subsequent changes in the real world, but it was then possible to give some indication of the scope and scale of what might have to be done. Occasionally, the use of regulatory powers is useful so that primary legislation need not be revisited. However, the theme of our debates on this part of the Bill has been that it is complex, detailed and difficult territory and already the Minister, in an act of reckless generosity, has indicated his willingness to reconsider and redraft. I appreciate some of the difficulties. When I was responsible for Finance Bills, we occasionally got things wrong and had to sort them out, but that was in the context that we knew what we were trying to get right. Here, there is an open-ended opportunity to change. 
 It would be helpful if the Chief Secretary would sketch in for my and the Committee's greater understanding the circumstances in which he envisages using that sort of power. I do not recall seeing such a power conferred upon the Treasury to do whatever it wants in amending something that starts out as primary legislation, but my memory is not infallible and if there was a case that I cannot remember, I shall apologise.

John Burnett: I join the hon. Member for Hertford and Stortford and the right hon. Member for Fylde in deprecating the procedure that the Government are seeking to arrogate to themselves to change particularly complex legislation. I agree that there will be changes and some of them, according to the Chief Secretary, could be in favour of the taxpayer. Change must, of course, take place and sometimes it will involve primary legislation, but the far-reaching provisions on stamp duty affect virtually all our fellow countrymen and it is essential that they are properly scrutinised, consulted upon and debated in the House. The negative procedure is not good enough and I join the right hon. Member for Fylde and the hon. Member for Hertford and Stortford in strongly condemning the procedure and asking the Chief Secretary to reconsider the matter and, at the very least, to have the affirmative procedure so that we know that it will go before the House.

Paul Boateng: At least the hon. Member for Torridge and West Devon does not have any form on negative resolutions, nor is he likely ever to have such form because the higher responsibilities of government are unlikely to come the way of his party. Were they to do so, I have no doubt that the burden of responsibility of office would fall on his shoulders; however, that is unlikely to happen. As he does not have any form, he is entitled to take us to task, as he did, for using the negative resolution procedure. If I were in his position, I would do the same.
 However, the right hon. Member for Fylde has form as long as your arm in Finance Bill after Finance Bill. For him to suggest that the Government are doing something untoward in using the negative resolution procedure beggars belief. Of course, the Government will use the procedure because it makes sense to have available to the Treasury powers with the most rapid and flexible disposals for making necessary changes to correct unintended hardships or—this is very important—to deal with changing commercial practices. 
 There is nothing untoward, suspicious or at all reprehensible about the use of such a power. Given the mass of new legislation, it is inevitable that from time to time small problems will be identified. When they are, it is necessary to deal with them in the most expeditious way possible, which is why we have the regulatory power in clause 50.

Mark Prisk: I enjoyed the Chief Secretary's theatrical performance of shock and horror at my right hon. Friend the Member for Fylde. [Interruption.] He even brings along his own Greek chorus—what a lovely prospect.
 However, I hope that the Chief Secretary will respond to my concern. We have already discussed the fact that the measure is ill conceived and ill considered—that is the outside view of professionals. The consultation was scrapped and a parallel consultation is taking place at exactly the time that we are trying to consider the measure in Committee. 
 We also have what I can describe only as adding insult to injury. I would be pleased to hear from the Chief Secretary what the limits are to clause 50(2). As I see it—I have no form, according to the Chief Secretary—there is no limit under subsection (2) to how the Treasury may change the provision with which we are dealing. That concerns us as parliamentarians, but it also concerns our constituents. I hope that the Chief Secretary will respond in a more positive manner.

Paul Boateng: The hon. Gentleman may have no form, but he certainly has a positive intention, if ever given the opportunity. Our intention is to keep the mens rea and actus rea completely separate for as long as possible. I do not mean to pull his leg unduly and I do not blame him for making his point. However, I do not accept that the legislation is ill conceived or ill considered. It has been extensively consulted upon and the Government continue to consult on the remaining concerns.
 I reject the notion that we should do other than what we are doing, which is finding a sensible way forward and tackling avoidance while allowing flexibility to respond to issues that have been identified in the lead-up to the operation of the new regime. We are bound to do that if we are to exercise responsibly our powers and avoid some of the pitfalls into which he suggested that we would otherwise fall. Therefore, I cannot accept his arguments about the entirely reasonable and sensible powers.

Rob Marris: Does my right hon. Friend feel able to assure the Committee that these broad powers will not be used retrospectively to increase an individual's tax bill?

Paul Boateng: I can give my hon. Friend the assurance that the measures will at all times be used fairly and in a way that represents the best interests of the taxpayer. We will maintain our commitment to flexibility, avoiding hardship—that is very important and addresses my hon. Friend's point—and ensuring that we properly reflect current commercial practice in a way that is consistent with our intentions, which are always to examine substance not form. We want to ensure that we bear down on ingenious avoidance schemes that manipulate the legislation to the advantage of a few and the disadvantage of the many.

John Burnett: I am sure that the Chief Secretary agrees that it cannot be in the best interests of taxpayers retrospectively to increase their burden of tax.

Paul Boateng: I do not want to go down the road of retrospectivity, or respond to hypothetical cases where something may or may not apply to individual taxpayers. That is not desirable. We are committed to fairness and to modernising this area of the law. We are committed—I do not want to labour the point, but I shall—to the best interests of the majority of taxpayers. I must always have in mind the majority of taxpayers, rather than individuals who may or may not be the subject of one of the hon. Gentleman's interesting hypothetical examples.

Norman Lamb: So, is the answer to the question of the hon. Member for Wolverhampton, South-West (Rob Marris) that the Chief Secretary is not ruling out possible retrospective application?

Paul Boateng: I really am not going down that road, as it would not be helpful. On individual cases, it is tempting to make promises, but it would not be helpful to do so. We have no intention of going down a road that is justified by anything other than the principles that underpin the legislation. Those principles are an emphasis on substance rather than form; an emphasis on fairness and modernisation; and bearing down heavily on avoidance mechanisms. I can do no more than give those assurances.

Michael Jack: I do not find the Chief Secretary's words on retrospection or his response to the concerns that have been raised at all satisfactory. The explanatory notes to subsections (2) and (3) contain the words:
''and as to how chargeable consideration should be calculated in specific cases.'' 
What concerns me—it is why I challenged the Chief Secretary on the negative approach—is that although he is right that the situation is not unknown in Treasury circles, this is a new tax. In his remarks on the exercise of powers conferred under clause 50, the Chief Secretary offered no comfort to the Committee or bodies beyond it that there would be any form of consultation about the measures. He knows exactly how the order-making power works and that once the 
 order has been laid, after a certain number of days it effectively comes into operation unless the House annuls it. 
 I am concerned that the Revenue could, if it did not like the look of something in specific cases on a transaction-by-transaction basis, propose an order to change the basis on which the chargeable consideration calculation was made—almost on a whim. Therefore, if I have understood the words correctly, the citizen would have no opportunity to mount a challenge through the commissioners on a decision that has been made and no chance of going to court to challenge whatever happened. It is almost like saying, ''Well, if we do not like it, we'll introduce a regulation, slam, bang, thank you m'am, and it's all gone.'' That is not the way to operate a brand new tax. Perhaps I do not understand it. The Chief Secretary has given us no comfort. He talked about changing circumstances and the need to act quickly if he noticed an avoidance scheme. 
 The Chief Secretary knows well that when the Inland Revenue spot an avoidance scheme—there are many, it is fertile territory—an Inland Revenue and/or Treasury press notice is normally issued, giving due notice that a particular activity will be dealt with in law and indicating the time scale in which events will occur. There is no reassurance that any such mechanism would be employed in the operation of the clause. Given the nature of a new tax, it is incumbent on the Chief Secretary to be a darn sight more specific than he has been in telling the Committee how the powers will operate. The notes on the clause say: 
''should be calculated in specific cases''. 
That could almost mean that I could, on a transaction-by-transaction basis, change the rules if I did not like the numbers and the way they were worked out. How on earth is the taxpayer to know where he is? The Chief Secretary should do the Committee the courtesy of being a little clearer about how the powers would operate in the real world.

David Wilshire: I rise to speak partly because I have been sitting here quietly all day and I can at least stretch my legs, and partly because I did not like what the Chief Secretary said.
 I know that it is the conventional wisdom that the usual channels try to keep out of debates and do not get their minds round the technicalities. However, I heard a generality that bothered me, and I would like the Chief Secretary to put me out of my misery and tell me he did not really mean it. I think he said that he was interested in what was best for the majority, not in what was best for the individual. He told the Committee about his desire to be fair and his belief in fairness. I am not sure how one can be fair and say that one is not interested in what is good for the individual. I like to think that I have misunderstood the right hon. Gentleman. I am sure that he can confirm that I have and that he will tell me what he really meant.

Mark Prisk: I said at the beginning of the debate that we hoped there would be a clear response from the Chief Secretary that would, in the interests of law-abiding taxpayers, provide some clarity about how the clause would affect them. I have considerable reservations about the fact that it will allow statutory instruments to put things through. However, I wanted to hear the Chief Secretary and listen to whether he was willing to make positive noises. There was no real attempt to answer the hon. Member for Wolverhampton, South-West on retrospectivity, or the question asked by my right hon. Friend the Member for Fylde. That is a grave omission, and I hope that the Chief Secretary will correct it. If he does not, the Opposition are minded to vote against the clause on the strict understanding that we are not satisfied that he has set out the justification for why there is an all-encompassing power for the Treasury to change the new tax in any way it chooses. He was not clear about that. I hope that he will correct his omission. If he does, we will support the clause; if he does not, we shall not.

Paul Boateng: Let me be as clear as I possibly can. To my hon. Friend the Member for Wolverhampton, South-West, let me say for the avoidance of doubt that we have no intention of using the regulations retrospectively. I hope that that answers his question.
 I make no secret of, nor do I apologise for, my concern always to ensure that nothing that I say in the Committee can bring any comfort to those who, given half a chance, would exploit the regulations for their own personal interest and develop new avoidance schemes. I have a high regard for the hon. Member for Spelthorne (Mr. Wilshire), but I would never in a million years be tempted to put him out of his misery. However much he might find himself in that condition, I am happy that he should remain in it. However, I can set his mind at rest and say that it was in the context of concern about those who would exploit the regulations that I made my remarks about the individual taxpayer in relation to the generality of taxpayers. I cannot have it said that the generality do not benefit if an avoidance mechanism is closed off for one taxpayer, because a loophole or an avoidance scheme that benefits one individual may work very much against the interests of the majority. I would be failing in my duty if I were not concerned about that. 
 I hope that the next point is clear to the hon. Member for Hertford and Stortford. The notion that was suggested by the right hon. Member for Fylde that if the Inland Revenue dislike something, they can change the legislation on the basis of what is contained in the clause, and that the clause is therefore a sign of a new tax, is not correct. That is not what the explanatory notes imply. We must work on a transaction-by-transaction basis. I have given an assurance that the provision will not be used retrospectively. It cannot be used in the way that the right hon. Gentleman suggests. 
 I believe that we have struck the right balance. The intention is to allow SDLT changes to be made quickly and at the earliest opportunity by regulation—if necessary, between Finance Bills. We recognise the 
 concern of hon. Members about negative resolution. We all understand that concern, and have expressed it ourselves. However, there is nothing sinister about that which is proposed—it is perfectly clear. 
 I do not believe that I can give any further assurance. I hope that the hon. Member for Hertford and Stortford will not press the clause to a vote.

Mark Prisk: It would be ungracious of me not to recognise and welcome the concession from the Chief Secretary on retrospective tax and the way in which the provision might be changed. However, after listening to his response, I do not believe that those whom we represent are any clearer at the end of this debate as to how their tax matters will be handled. Therefore, I shall oppose the clause.
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 16, Noes 9.

Question accordingly agreed to. 
 Clause 50 ordered to stand part of the Bill.

Schedule 4 - Stamp duty land tax: chargeable consideration

Mark Prisk: I beg to move amendment No. 5, in
schedule 4, page 155, line 38, leave out from beginning to end of line 3 on page 156.
 We move to the substance of schedule 4. The amendment would remove paragraph 2, under which stamp duty land tax would be charged on a chargeable consideration, but a consideration that includes VAT. That is a tax on tax and is accordingly inherently unfair, in which it runs counter to the stated aims of the Government's so-called modernisation, to which the Chief Secretary is so keen to refer. Many professional and small business organisations have told me that they believe that that tax on tax is wrong in terms of business practice and in principle. How does the Chief Secretary justify maintaining that outmoded and unfair element of the old duty? It is not just a question of being a tax on tax; it is a transaction tax on a transaction tax.
 We discussed earlier whether the tax is legal under the European Community's sixth directive, which requires each nation to have one transaction tax, and there is a danger that there may be a contravention of our treaty obligations. Can the Chief Secretary explain whether, given our treaty commitments both in the EU and beyond, it is legal to levy a transaction tax on an existing transaction tax? If it is, what is the legal basis for such an assertion? The Economic Secretary is as aware as I am that double taxation treaties have kept us in entertainment and employment in recent months. Here is a classic cross-question, and I hope that the Chief Secretary will be able to answer it. 
 I hope that the Chief Secretary will at least see some sense on this issue. I genuinely believe that this tax on tax, or transaction tax on transaction tax, is wrong. It runs counter to the Government's modernisation approach, and if we are not satisfied with his answers, I shall press the amendment to a vote.

Norman Lamb: We support the amendment. It cannot possibly be justifiable to have a tax on a tax. I know that many have campaigned on that issue for many years. The Law Society suggests another way of dealing with the issue by simply changing ''include'' in line 39 in paragraph 2 to ''exclude''. That is a simpler way of making it absolutely clear that the VAT element should be excluded from the chargeable sum. In essence, we support the amendment, which seeks to remove VAT from the equation.

John Burnett: We deprecate clause 54 and think it entirely wrong that there should be double taxation.
 We are talking about what is almost a constitutional impropriety. We talked earlier about retrospective taxation and we received some comfort from the Chief Secretary during discussion of the last clause. Now the Economic Secretary to the Treasury is with us. He cannot stand up and justify double taxation; it should be anathema to all of us from both sides of this House. We hope to hear that he fully concedes the fact that the clause should be deleted. 
Mr. Boateng rose—

Nicholas Winterton: The hon. Gentleman is going to hear from the Chief Secretary, as he has now come back.

Paul Boateng: The hon. Member for Torridge and West Devon will once again be disappointed. I certainly can justify double taxation, as could my hon. Friend the Economic Secretary were he fortunate enough to have drawn this particular straw.
 Amendment No. 5 attempts to eliminate paragraph 2 from schedule 4, which deals with whether VAT is to be treated as a consideration. Schedule 4 is a crucial part of the stamp duty land tax. It deals with quantifying the amount to which the rate is applied to calculate the tax charge. Paragraph 1 sets out that amount—the ''chargeable consideration''—is 
''any money or money's worth given . . . directly or indirectly''
for the property being acquired by the purchaser or a person connected to him. That is subject to express provisions to the contrary, which are contained in some of the 15 other paragraphs of the schedule. 
 One of the most important aspects of consideration to clarify is a treatment of any VAT that is or may be paid by the purchaser. Under existing stamp duty case law, it is dictated that VAT should be included as consideration. Conservative Members take exception to that. Moreover, for new leases it is assumed that VAT is charged unless the lease specifically prohibits it. By eliminating paragraph 2 altogether, amendment No. 5 would reduce clarity in the new legislation and throw us back to the case law principles whereby VAT would be treated as consideration unless prohibited from being charged.

John Burnett: Will the right hon. Gentleman give way?

Paul Boateng: If I may finish my point, as it is complex.
 In paragraph 2, we are trying to clarify that VAT is included as consideration only when it is actually charged. The situation has therefore been improved by this measure. In the past, it fell to charge regardless; now, it is more limited. The amendment would throw us back on to case law, which would be unfortunate. 
 I appreciate the strength of feeling behind the principle that VAT should never form part of consideration. However, that would have a cost, which is unlikely to trouble the hon. Members who speak for the Liberal Democrat cause, but should trouble those who speak for the Conservative cause, especially as they are seeking to cover the remnants after the 20 per cent. has been cut. They should be concerned about where the money is coming from, as the cost would be about £80 million for a full year. That would be the price if we accepted the principle being espoused by Opposition Members. Such an amount is better spent elsewhere on specific subsale relief or disadvantaged areas, for example. 
 It is a matter of achieving the right balance. I suspect that we shall not agree across the divide in Committee about whether we have achieved it. We believe that we have found the right balance by eliminating the inclusion of theoretical VAT charges from consideration, but including it when they are actually paid. I urge the Committee to reject amendment No. 5, which would restore the existing position. I do not want to go on about such matters at great length, but I am not aware that any attempt was made by the Conservative party to challenge the existing position when it had the power to do so. I exempt those who are part of the Liberal Democrat cause from that charge, but it is true of the Conservative party.

Norman Lamb: I appreciate that the provision gets in the money, but does the Chief Secretary have any difficulty about the principle of taxing someone on the tax that that person has paid?

Paul Boateng: No.
 I shall now move on to the charge about the European Community sixth Council directive. I will not go on about it, but it is important that we settle the matter once and for all. The EC sixth directive prohibits turnover taxes that exhibit the same characteristics as VAT. The European Court of Justice has stated repeatedly that the essential characteristics of VAT are that it applies generally to transactions relating to goods and services; that it is proportional to the price of those goods and services; that it is charged at each stage of the production and distribution process and that it is imposed on the added value of goods and services since the tax payable on a transaction is calculated after deducting the tax paid on the previous transaction. 
 Of those essential characteristics, the only one that is present in the new stamp duty structure is that the tax is proportional to the consideration paid. That is true in the case of leases with rent based on turnover, payable over the term of the lease. The Government's legal advice is that, for a tax to be prohibited of turnover tax, all the essential characteristics—not just one—must be present and that, accordingly, we do not fall foul of the sixth VAT directive. I hope that, in the light of my explanation, I have dealt with the directive. I accept that we have a disagreement in principle in Committee.

John Burnett: I want to make a small, but important, point. The Chief Secretary used the words, ''unless the lease specifically prohibits it''. I am sure that he is aware that it often happens in practice that such action can take place by side letter. I hope that he agrees that, if there is a prohibition by side letter, it should be just as compelling as if it were in the main body of the lease.

Paul Boateng: I refer to the broad point of principle. Let us consider the substance not the form. I accept that there is a disagreement in principle in Committee. We had sought to achieve the right balance and I hope that the hon. Member for Hertford and Stortford will not press the amendment to a Division.

Mark Prisk: I am grateful to the Chief Secretary and the Economic Secretary for responding to such concerns. I shall start with the transaction tax on tax. I fully understand the Chief Secretary's argument, but he must appreciate that many taxation experts believe that there is a genuine conflict here. In his absence, I referred to the wider international taxation regime and, in particular, to double taxation treaties and whether there is relevance there. If there is a particular aspect to that, I should be happy to allow the Chief Secretary to intervene. I see that he does not wish to do so.
 The substantive point is one of principle. The Chief Secretary has said that the new arrangements introduce a provision that will enable some people not to face the burden of VAT. Yet from talking to all the small business organisations, the taxation experts and those in the property professions it becomes clear that, as a result of this paragraph, the majority will find themselves paying tax on tax. It is an important 
 principle that we believe is wrong. Given that throughout our debates on this tax the Chief Secretary has spoken about the need for a modern tax and fairness, this paragraph contradicts the Government's claimed goals. I therefore do not intend to seek to withdraw the amendment and we shall take it to the vote.

Paul Boateng: I hear what the hon. Gentleman says. Let me give him the assurance that he seeks. We do not believe that the paragraph causes us to fall foul of any of our international obligations, so let us get that one out of the way. This is a reforming measure. We believe that the current law is unsatisfactory. The hon. Member for Torridge and West Devon says, ''Unless the lease specifically prohibits it'' and then makes a reference to side letters. Such an approach is unsatisfactory. Paragraph 2 makes it clear that treatment is linked, and must be linked, to an election to Customs and Excise. It is not a question of relying on side letters.
 We have sought to give Opposition Members the clarification and the assurances that they have requested. If they wish to press the amendment to a vote, that is a matter for them. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 9, Noes 17.

Question accordingly negatived.

Nicholas Winterton: Order. Before we move to the next amendment that I have selected, I give advance notice that unless I receive any other notice, if there is a Division in the Chamber I shall break for 15 minutes. However, I repeat that there will be a meeting of the Programming Sub-Committee as and when the usual channels advise me.

Mark Prisk: I beg to move amendment No. 187, in
schedule 4, page 159, line 3, leave out
'to which paragraph 10 applies'
and insert
'of construction, improvement or repair of a building or other works to enhance the value of land.'.
 Thank you for that guidance, Sir Nicholas, which I am sure the Committee will appreciate. 
 I am particularly grateful to several lawyers, and especially to the Law Society, for their help in drafting the amendment. Its purpose is to clarify the effect of paragraph 11. It is as simple as that. It is unclear whether the reference in paragraph 11 to 
''works to which paragraph 10 applies'' 
is intended to be a reference to the phrase 
''works of construction, improvement or repair of a building or other works to enhance the value of the land'' 
or a reference to such works that fulfil the conditions set out in paragraph 10(2). The explanatory notes suggest that the former interpretation is the correct one. The amendment would achieve that in the Bill, and I hope that the Chief Secretary will be able to accept the amendment in that light. I should just say before hearing the rest of the Committee's concerns that I hope to consider the background to the amendment, and the wider issue of facilities management, service offices and service agreements during the stand part debate.

John Burnett: I am also grateful to the Law Society for alerting me and other Committee members to one or two unsatisfactory aspects of the clause. The view is correct that charging stamp duty land tax on the value of carrying out works or the provision of services is likely to lead to considerable practical difficulty in assessing the tax. The district valuers offices are already much engaged and extremely busy, and I wonder whether the Chief Secretary can tell us how it is proposed that that charge would be quantified.
 I reiterate the point made by the hon. Member for Hertford and Stortford. Is there to be a charge on the cost of doing the work, or the value of the work itself?

Paul Boateng: For the avoidance of doubt, I shall clarify the purpose of paragraph 11. I hope that I can meet the concerns of the hon. Member for Hertford and Stortford. The paragraph is designed to deal with the provision of services that are not works of construction, improvement or repair of a building. Those are dealt with by paragraph 10, which may bring works into charge.
 Although paragraph 10 may exclude some works from charge, that does not mean that paragraph 11 applies to such work. We cannot simply rely on the operation of paragraph 10 to bring those works covered by paragraph 11 into charge. We do not accept that the interaction of those paragraphs can be construed otherwise, and thus the amendment is unnecessary. If it were capable of the construction that the hon. Gentleman has put on it, such an amendment might be necessary, but we submit that it is not.

Mark Prisk: The Chief Secretary has a distinguished legal background, and I do not share that experience. However, the concern about the potential for those paragraphs to be misconstrued or misinterpreted rests not with me, but with the Law Society—an august body. The Chief Secretary has assured us that the provision could not be interpreted in that way, so how can it be that the Law Society has done just that?

Paul Boateng: Far be it for me to take issue with a body of which I was once a member, before being called to the bar. Occasionally, however, even the Law Society has been known to get things wrong. [Interruption.] I hear gasps of disbelief. I am already out of there, as they say. On this occasion the Law Society is wrong. I am sure that it will not mind being wrong, that it will welcome the clarification that the intervention by the hon. Member for Hertford and Stortford enables me to make and that, being reassured, it will turn its attention to the next area in which its considerable skills will find ready opportunity for development and exploration. No doubt the hon. Gentleman will raise other issues brought up by the Law Society, which is proper. That is how we tease out the meaning of clauses, paragraphs and schedules. I hope that having been reassured about the meaning of paragraph 11 and its relationship to paragraph 10, the hon. Gentleman will at least feel able to let this one go.
 The hon. Member for Torridge and West Devon asked how the charge under paragraph 10 will be applied in practice in relation to cost or value. I assure him that the Inland Revenue will in due course provide guidance on that matter, and, indeed, it is already liaising with those representing valuers to ensure that it has an input into the process. Value or costs refers to the amount that would have to be paid in open market. When the purchaser buys in open market that will be the cost. In other circumstances, value might be appropriate. Such matters are being explored in the course of discussions with those representing valuers, and I am sure that the outcome will be satisfactory to the profession and the taxpayer.

John Burnett: Will we in Parliament have a chance to scrutinise those deliberations?

Paul Boateng: I have no doubt that the House will have an opportunity to reflect on the outcome of those deliberations. That is surely what the House would want. When that might happen would, I suppose, depend on the time scale and the time taken to reflect and deliberate by those advising me and those representing valuers. I shall ensure that as soon as guidance is issued a copy will be drawn to the attention of the hon. Gentleman.

Mark Prisk: If I may begin by referring to the last point made by the hon. Member for Torridge and West Devon, and to the answer he was seeking. If I understood and interpreted correctly what the Chief Secretary said, the answer was no. Apparently, the House will not be given the opportunity to consider the question of whether cost or value is more appropriate. That reinforces our concern. We have a scrutiny process in hand, but parallel and separate to that is a consultation process that is trying to fill in the bits the Government did not deal with when Ministers chose to close down the consultation on 21 January. I know that the Chief Secretary has not denied that during the debate. That is a concern I have registered in the past.
 I am grateful that the Chief Secretary acknowledged the point underlying the amendment. Perhaps more distinguished legal minds than mine have 
 misinterpreted it. I am grateful that the Chief Secretary has noted that and, on that basis, and in the wish for conviviality as we possibly draw to a close at the end of the day, I am more than willing to withdraw the amendment.

Paul Boateng: In the spirit of conviviality, I assure the hon. Gentleman that we intend to publish as much guidance in draft as possible, so that it can be the subject of comment by representative bodies.

Mark Prisk: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Mark Prisk: I beg to move amendment No. 6, in
schedule 4, page 160, leave out lines 11 to 13.

Nicholas Winterton: With this it will be convenient to discuss the following:
 Amendment No. 188, in 
schedule 4, page 160, line 20, leave out 'grant or surrender' and insert 'grant, surrender or assignment'. 
Amendment No. 189, in 
schedule 4, page 160, line 24, at end insert— 
 '(ab) in relation to the assignment of a lease, a premium moving from the assignor to the assignee,''.'.

Mark Prisk: The air of conviviality may grow heavy, although I suspect that that has something to do with the weather and having been in Committee for such a long time. I shall endeavour to take the amendments together should external commitments allow. I beg to move amendments Nos. 6, 188 and 189.

Nicholas Winterton: Order. I am afraid that the hon. Gentleman cannot do that. He can move amendment No. 6. I said that it would be convenient to consider amendments Nos. 188 and 189. The hon. Gentleman does not have to move them.

Mark Prisk: I am most grateful to you for correcting me, Sir Nicholas.
 Amendment No. 6 is intended to delete paragraph 14(b) and (c), as it relates to leases. The provision represents a departure from the existing legal situation with regard to stamp duty. A surrender and re-grant is likely to be commercially necessary when the term is to be extended or other terms varied. Stamp duty land tax will be payable on the full value of the new lease, with no credit for duty paid on the old lease. There seems no reason to impose those further charges.
 Modern commercial practice, on which the Government are so keen, is moving away from where the Government seek to legislate. These days, when many businesses get to what is known as the fag end of their lease, they are quite willing voluntarily to surrender it to the landlord—perhaps with changed rent review patterns or different terms and conditions—on the understanding that a new lease will be granted. It is a voluntary relationship between two parties. The problem with paragraph 14(b) and (c) is that it would penalise such modern commercial practice. As such, it represents an unnecessary intrusion by the Government into conventional contractual arrangements between landlord and tenant. 
 Surely it cannot be right or fair to apply stamp duty land tax on the full value of the new lease and yet provide no recognition whatever of duty paid on the old lease. I hope that the Chief Secretary will recognise that the amendment is reasonable and accept it. 
 I believe that you were hoping that I might be able to consider amendments Nos. 188 and 189 as well, Sir Nicholas, and I am aware that there is much time pressure. The amendments are intended to extend the exemption for reverse premiums to the assignment of a lease. I thank a number of legal minds and the Law Society for their help with the matter. Paragraph 15 currently assumes that a reverse premium would be paid only on the grant or surrender of a lease. The paragraph, therefore, should apply to the reverse premium mentioned. I hope that the Chief Secretary will respond positively to the amendments. 
Debate adjourned.—[Mr. Sutcliffe.] 
 Adjourned accordingly at two minutes to Seven o'clock till Thursday 5 June at five minutes to Nine o'clock.